Xellia lays out plan to revive Ben Venue complex

Drug maker aims to use newer buildings once it
satisfies FDA's safety standards

Denmark-based Xellia took over the Ben Venue complex in Bedford, which closed in 2013.

For now, Xellia Pharmaceuticals is producing one thing at the former Ben Venue Laboratories complex: Paper.

Lots and lots of paper. Of course, the Denmark-based company eventually plans to use the enormous complex for its originally intended purpose: Drug manufacturing. First, however, Xellia must prove that it can meet the U.S. Food and Drug Administration’s safety standards — standards that Ben Venue failed to meet. That means Xellia will have to document nearly every step it takes between now and the end of 2017, when it plans to start making injectable antibiotics at the Bedford site, which closed at the end of 2013. For instance, as Xellia designs its manufacturing processes, the company will have to write down exactly how each of those processes is supposed to be performed — and it will have to record the steps it will take to ensure that those processes are followed. But Niels Lynge Agerbæk says that the Xellia Cleveland team has what it takes to navigate the process and bring a portion of the complex back to life. Roughly 80 employees and contractors are working on the so-called Xellia Life project from two rooms on the second floor of Building 24 — one of the buildings that they plan to revive. They are doing meticulous work, according to Agerbæk, who moved to the Chagrin Falls area from Denmark to become the site’s general manager a few months ago. While walking past 10 whiteboards lined up on a wall, he pointed out all kinds of charts and schedules detailing what has been done and what still needs to be done. In short, more people need to be hired, more tests need to be run and more documents need to be produced — thousands more. “We are not going to take any shortcuts,” he said. Right now, Xellia can’t conduct any commercial activity at the site. The FDA put the complex under a consent decree in January 2013, when it was owned by Ben Venue. Two years earlier, the FDA and foreign regulators had discovered dozens of quality control problems at the site. For instance, the FDA said Ben Venue had failed both to figure out why metal particles had previously ended up in several batches of drugs and to fix the problem. Several customers had complained about the particles. After spending $350 million to fix the issues, Ben Venue closed the complex at the end of 2013, laying off the last of its 1,100 employees. At the time, the 75-year-old company said it faced “systemic manufacturing challenges” and stood to lose another $700 million over the next five years. Xellia, however, is a different company, and it’s in a different position than Ben Venue was back then.

Foundation for the future

For one, it’s only working to revive a portion of the complex — the newer buildings on the north end. Plus, whereas Ben Venue had to fix pre-existing manufacturing and quality control systems, Xellia can start from scratch, Agerbæk said. He equated it to building the foundation of a house.

“Basically, we have time to do the right stuff, to make sure that the foundation is strong. If you have a house, it’s difficult to make the foundation strong if you’re living in it at the same time,” he said. Although Xellia is implementing its own quality control system, it is trying to learn from Ben Venue’s mistakes, he said, without going into detail about those mistakes. Agerbæk added that Xellia has hired “quite a few” former Ben Venue employees, who are working alongside longtime Xellia employees and people recruited from other drug companies. “What we judge on is of course not where you’ve been working but who you are,” he said. In November, Xellia bought the site from Hikma Pharmaceuticals, a London-based company that had acquired the property and Ben Venue’s generic drug development business in 2014. Hikma still owns one building on the site, the so-called Quality and Development Center. In April, Xellia and the FDA reached an agreement on how to modify the consent decree. To summarize, it says the company will need to have an outside expert conduct an inspection to ensure that its manufacturing processes and quality control systems are up to the FDA’s standards. The FDA also might conduct its own inspection before giving Xellia the go-ahead to begin selling drugs made at the newer buildings on the site. But Xellia should be able to start using the facility for packaging and distribution purposes before the end of 2016, according to Agerbæk. The company won’t have to hire an outside expert to inspect that process, but the FDA could choose to conduct its own inspection, according to the modified consent decree. Thus, Xellia has already started testing a highly automated packaging and labeling machine at the complex.

Eating the elephant

What about the older buildings on the southern side of the property? Xellia would have to jump much higher hurdles to begin using them, judging from the consent decree. (It dedicates five pages to the newer facilities and nearly 14 pages to the older ones.) As a result, Xellia has no plans for them at the moment, Agerbæk said, noting that they would require substantial investments related to room design and ventilation systems.

Given that the complex is so big, Xellia is trying to “eat the elephant” one piece at a time, he said. Xellia was interested in the site because it wanted more manufacturing capacity, Agerbæk said. It already produces sterile, injectable drugs at plants in Copenhagen and Raleigh, N.C., but it’s maxed out, he said. The Bedford complex should help Xellia meet future demand for injectable, antibiotic drugs — including some that are in short supply, according to a statement that CEO Carl-Åke Carlsson made in the company’s 2015 Corporate Report. “This will also support the ongoing expansion of our pipeline and prepares us well to take advantage of future opportunities for growth,” he said. The company can afford to take the long view, Agerbæk added: The vast majority of its shares are owned by Novo A/S, an investment vehicle owned by a nonprofit, the Novo Nordisk Foundation. “We are in this business to actually do something about infections,” Agerbæk said.